8.6A-103 - A-103. Applicability of title.

§ 8.6A-103. Applicability of title.

(1) Except as otherwise provided in subsection (3), this title applies to abulk sale if:

(a) The seller's principal business is the sale of inventory from stock; and

(b) On the date of the bulk sale agreement the seller is located in thisstate or, if the seller is located in a jurisdiction that is not a part ofthe United States, the seller's major executive office in the United Statesis in this state.

(2) A seller is deemed to be located at his or her place of business. If aseller has more than one place of business, the seller is deemed located athis or her chief executive office.

(3) This title does not apply to:

(a) A transfer made to secure payment or performance of an obligation;

(b) A transfer of collateral to a secured party pursuant to § 8.9A-609;

(c) A disposition of collateral pursuant to § 8.9A-610;

(d) Retention of collateral pursuant to § 8.9A-620;

(e) A sale of an asset encumbered by a security interest or lien if (i) allthe proceeds of the sale are applied in partial or total satisfaction of thedebt secured by the security interest or lien or (ii) the security interestor lien is enforceable against the asset after it has been sold to the buyerand the net contract price is zero;

(f) A general assignment for the benefit of creditors or to a subsequenttransfer by the assignee;

(g) A sale by an executor, administrator, receiver, trustee in bankruptcy, orany public officer under judicial process;

(h) A sale made in the course of judicial or administrative proceedings forthe dissolution or reorganization of an organization;

(i) A sale to a buyer whose principal place of business is in the UnitedStates and who:

(i) Not earlier than twenty-one days before the date of the bulk sale, (A)obtains from the seller a verified and dated list of claimants of whom theseller has notice three days before the seller sends or delivers the list tothe buyer or (B) conducts a reasonable inquiry to discover the claimants;

(ii) Assumes in full the debts owed to claimants of whom the buyer hasknowledge on the date the buyer receives the list of claimants from theseller or on the date the buyer completes the reasonable inquiry, as the casemay be;

(iii) Is not insolvent after the assumption; and

(iv) Gives written notice of the assumption not later than thirty days afterthe date of the bulk sale by sending or delivering a notice to the claimantsidentified in subparagraph (ii) or by filing a notice in the office of theclerk of the circuit court of the county or city where the seller's businessis located;

(j) A sale to a buyer whose principal place of business is in the UnitedStates and who:

(i) Assumes in full the debts that were incurred in the seller's businessbefore the date of the bulk sale;

(ii) Is not insolvent after the assumption; and

(iii) Gives written notice of the assumption not later than thirty days afterthe date of the bulk sale by sending or delivering a notice to each creditorwhose debt is assumed or by filing a notice in the office of the clerk of thecircuit court of the county or city where the seller's business is located;

(k) A sale to a new organization that is organized to take over and continuethe business of the seller and that has its principal place of business inthe United States if:

(i) The buyer assumes in full the debts that were incurred in the seller'sbusiness before the date of the bulk sale;

(ii) The seller receives nothing from the sale except an interest in the neworganization that is subordinate to the claims against the organizationarising from the assumption; and

(iii) The buyer gives written notice of the assumption not later than thirtydays after the date of the bulk sale by sending or delivering a notice toeach creditor whose debt is assumed or by filing a notice in the office ofthe clerk of the circuit court of the county or city where the seller'sbusiness is located;

(l) A sale of assets having:

(i) A value, net of liens and security interests, of less than $10,000. If adebt is secured by assets and other property of the seller, the net value ofthe assets is determined by subtracting from their value an amount equal tothe product of the debt multiplied by a fraction, the numerator of which isthe value of the assets on the date of the bulk sale and the denominator ofwhich is the value of all property securing the debt on the date of the bulksale; or

(ii) A value of more than $25 million on the date of the bulk-sale agreement;or

(m) A sale required by, and made pursuant to, statute.

(4) The notice under subsection (3) (i) (iv) must state: (i) that a sale thatmay constitute a bulk sale has been or will be made; (ii) the date orprospective date of the bulk sale; (iii) the individual, partnership, orcorporate names and the addresses of the seller and buyer; (iv) the addressto which inquiries about the sale may be made, if different from the seller'saddress; and (v) that the buyer has assumed or will assume in full the debtsowed to claimants of whom the buyer has knowledge on the date that the buyerreceives the list of claimants from the seller or completes a reasonableinquiry to discover the claimants.

(5) The notice under subsections (3) (j) (iii) and (3) (k) (iii) must state:(i) that a sale that may constitute a bulk sale has been or will be made;(ii) the date or prospective date of the bulk sale; (iii) the individual,partnership, or corporate names and the addresses of the seller and buyer;(iv) the address to which inquiries about the sale may be made, if differentfrom the seller's address; and (v) that the buyer has assumed or will assumethe debts that were incurred in the seller's business before the date of thebulk sale.

(6) For purposes of subsection (3) (l), the value of assets is presumed to beequal to the price the buyer agrees to pay for the assets. However, in a saleby auction or a sale conducted by a liquidator on the seller's behalf, thevalue of assets is presumed to be the amount the auctioneer or liquidatorreasonably estimates the assets will bring at auction or upon liquidation.

(1997, c. 121; 2000, c. 1007.)